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4 Modern Sales Metrics for Bookkeeping Firms

Tim Sines
Posted by Tim Sines on May 21, 2024 3:00:00 PM

Most bookkeepers and accountants have a good grasp of their client's business numbers. Revenue, payroll, expenses, and write-offs are figures that we work with on a daily basis. In fact, understanding the numbers is a core tenet of being successful as a bookkeeper.

Yet, things become a lot more uncertain when we ask the firms we talk to about the internal metrics they are tracking. It’s a fairly common situation in almost any professional services field: companies tend to be better at doing work for others than they are for themselves, even if the in-house processes are virtually identical to the work they do for clients.

Fortunately for bookkeepers who may not always be on top of their own metrics, some modern key performance indicators (KPIs) can paint a detailed picture of how the firm’s sales efforts are going with specific reporting and analytics.

We suggest considering the metrics below as a starting point, whether you’re looking to expand the kind of analytics you’re currently tracking or just starting a new initiative.

Churn and retention rate

These numbers are opposites: the churn rate is the annual, quarterly, or monthly percentage of clients who do not re-engage with your services, while the retention rate defines the number of clients who stick around over a given period of time.

Both are worth tracking, but having one or the other as a key sales data point is especially important because they can help you identify a broader sales issue in your firm. High churn and low retention indicate that there may be an issue with the way your bookkeeping firm provides services. It could also mean that your sales team is targeting the wrong leads.

Customer acquisition cost (CAC) payback rate

CAC is a common number across all industries, from hospitality to legal services. You can update how you measure CAC by adding in the amount of time it takes to repay those costs, which helps you understand the efficiency of your sales and marketing.

Remember to keep things in context as you evaluate your CAC payback rate. Different forms of customer acquisition may work at different rates. Content marketing, for example, is a notoriously time-consuming form of attracting clients—but it’s well worth it when you consider the brand benefits these kinds of campaigns provide.

On the other hand, if you’re investing in a social media or search engine ad campaign, you may expect to see results more quickly: you’re serving ads directly to a specific group of people and (in theory) are only paying when they view or click your ads.

Net monthly recurring revenue (MRR) growth rate

It may sound complicated, but the net MRR growth rate is simply a measure of whether your business is growing, staying the same, or shrinking. Think of it as a high-level indicator of the health of your firm’s bottom line. Steady net MRR growth means your business is either adding new clients or upselling existing clients at a healthy rate.

As with all these other sales metrics, it’s important to consider some context. You might have a very high net MRR growth rate, but if your team struggles to deal with all the new work, it could lead to some problems with internal operations.

Alternatively, your net MRR growth rate might be unusually low during a time of year when things typically slow down across your industry. For the most accurate picture, assess your net MRR growth rate multiple times throughout the year and consider what else is happening when you do.

Employee satisfaction index

While employee perspective on your firm may not be a traditional sales element, in a way, you are selling your own bookkeeping firm to the best candidates available for the work you need completed. In fact, convincing your team to continue working for you could be the most important sale you make—and it’s repeated every day, week, and month.

Employee satisfaction index (ESI) measures the way your employees feel about you with three simple questions:

  • How satisfied are you with your current workplace?
  • How well does your current workplace meet your expectations?
  • How close is your current workplace to your ideal job?

Each question is answered on a scale from 1 to 10. From there, you divide the total score of all employees by the maximum possible score, then multiply by 100 to receive your composite ESI. Once you have a baseline understanding of your ESI, you can dig deeper into the specifics of these scores. When you combine them with detailed survey questions, you may find a common theme preventing you from creating a better workplace for your team.

Don’t let your metrics get outdated

“Knowing your numbers” can have several meanings in bookkeeping services. In our experience, too few firms have a strong grasp of advanced sales metrics that measure more specific performance.

If you combine a solid understanding of the numbers listed here with modern software tools that help you track everything in one place, you can make daily steps towards giving your team a better workplace, which will improve your firm’s success and client satisfaction in the long run.

Sponsored Content: This article is generously brought to you by one of our valued sponsors. Their support enables us to continue delivering expert insights and the latest industry trends to our dedicated community of accounting professionals.

Topics: Practice Management, Practice Growth


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